Their own, built from scrap engine, named X-Ray, which is technically more advanced than the Source engine.
Most people are brainwashed by the work Valve has done with Source, and think it's the best engine on Earth. But Valve started work on Source back in late 1998. And GSC (developers of S.T.A.L.K.E.R) created X-Ray in 2002.
Look at the story of the development of the game, read the official forums, and those at
www.oblivion-lost.com
People keep complaining about the delays, and they believe three years of development is "enough", or "too long".
Half-Life 2's development started in 1998, from the first ideas in minds and sketches, to its final release in late 2004.
Five ... not three, but five years into development.
If Valve would have announced that Half-Life 2 was under development right from the start back in 1998, then most people would have believed it would never be released somewhere in 2003.
The fact is ... S.T.A.L.K.E.R is, and will be, upon release, the only, and first game of its genre. It is a very complex game, especially coding-wise, and is technically huge. A huge, virtual, living and "breathing" world, provided by the colossal amount of things the X-Ray engine can do.
Half-Life 2 itself, and its engine can feel ashamed in front of S.T.A.L.K.E.R and its engine.
It's not S.T.A.L.K.E.R that's "aging" here. It's the Source engine.
Most people even complained about Half-Life 2's graphics, saying it would have looked jaw-dropping if it would have been released somewhere in 2003, and that being released in 2004 was a "mistake". Its closest competitor then was Far Cry, and that game still looks better today than Half-Life 2 on any settings.
There's many things to learn about X-Ray and S.T.A.L.K.E.R.
And the most recent news tells us the core components of the game are completed, and they are now working on the story-line, and its interactivity with the game's unique-on-Earth Life Simulation System. Plus other things. Included the "eye-candy", being constantly reworked as the years pass.
And 95% of the videos from the game are based on an old build from 2003, running in DirectX 8.1 mode.
There is technically only one official DirectX 9.1 video, and it was shown at E3 2005 from THQ (the publishers).
The game is far, far away from being "cancelled", or a "cousin of Duke Nukem Forever".
It will be released, and they are even planning a sequel to it. Read the news on the web site, read, read ... and read more. Look at the information, and stop judging that game based on mere two years-old sayings (based on old information).